Worldwide Company obtained a charter from the state in January that authorized 200,000 shares of common stock, $10 par value. During the first year, the company earned $38,200, declared no dividends, and the following selected transactions occurred in the order given: Issued 60,000 shares of the common stock at $12 cash per share. Reacquired 2,000 shares at $15 cash per share from stockholders; the shares are now held in treasury. Reissued 1,000 of the shares in transaction (b) two months later at $18 cash per share. 3. Prepare the stockholders' equity section of the balance sheet at December 31. TIP: Because this is the first year of operations, Retained Earnings has a zero balance at the beginning of the year. (Amounts to be deducted should be indicated by a minus sign.)

Question

Matthew Mooney

Business

28 February, 01:13

Worldwide Company obtained a charter from the state in January that authorized 200,000 shares of common stock, $10 par value. During the first year, the company earned $38,200, declared no dividends, and the following selected transactions occurred in the order given: Issued 60,000 shares of the common stock at $12 cash per share. Reacquired 2,000 shares at $15 cash per share from stockholders; the shares are now held in treasury. Reissued 1,000 of the shares in transaction (b) two months later at $18 cash per share. 3. Prepare the stockholders' equity section of the balance sheet at December 31. TIP: Because this is the first year of operations, Retained Earnings has a zero balance at the beginning of the year. (Amounts to be deducted should be indicated by a minus sign.)

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Marlon Leach · Answer 1

Answer and Explanation:

The preparation of stockholders' equity section is shown below:-

Worldwide Company

Statement of stockholder equity

31 December

Paid-in-capital

Common stock - $10 par, 200,000 shares authorized

60,000 shares issued and outstanding $600,000

Paid in capital in excess of par - common $120,000

(60,000 * $12) - (60,000 * $10)

Paid in capital from treasury stock $3,000

(1,000 * $18) - (1,000 * $15)

Total paid in capital $717,000

Retained earning $38,200

Sub total $755,200

Less: Treasury stock at cost $15,000

(1,000 * $15)

Total stockholder equity $740,200

Therefore from above the stockholders' equity is prepared.